EM Subsidy – What you are paying for?
- August 8, 2017
- ByYogin Patel
As healthcare costs continue to skyrocket, hospitals and health systems nationwide are looking to outsource their emergency department (ED) services. Many of the groups being utilized are approaching hospital administrators with demands for increased subsidies – usually with no corresponding expansion of service. Worried about losing providers, facilities often comply with these demands, assuming there is no alternative. ApolloMD has turned this model on its head through a unique aligned-incentive model (incorporating quality and throughput), efficient operations and a proven cost containment strategy.
However, in situations where a subsidy is unavoidable, financial transparency is key. Hospitals and health systems should know exactly what they are paying for and why. This commitment to being a collaborative, fiscally-responsible, open partner is at the core of the success of ApolloMD.
Here are just a few reasons a subsidy would be needed:
If a hospital’s payor mix has high percentages of charity/self-pay and Medicaid, this creates a need for subsidization. Self-pay patients reimburse between 1-2% of gross charges and Medicaid reimburses between 8-11% of gross charges. Compare this to commercial insurance, which reimburses around 40-60% of gross charges, and the financial impact of treating a larger self-pay and Medicaid population becomes significant.
Some hospital EDs, usually in rural areas, are more difficult to staff than others. Healthcare providers may not live in the area and a provider group will have to pay travel and locum providers rates on the high end of the market, plus travel costs to incentivize them to work in these locations. The higher compensation costs often create a need for subsidization.
Lower volume locations, usually less than 20,000 visits annually, will often require subsidization, as the volume is simply not there to generate the revenue needed to offset the cost of staffing an ED 24-hours-a-day, 7-days-a-week.
ApolloMD’s innovative business model distinguishes our practice from other groups and inherently promotes cost savings. As a physician-operated group with national scope, we leverage our size and expertise to negotiate favorable rates with managed care providers and maximize the amount we are able to collect so that we are less reliant on assistance from our partner hospitals. We also closely align the goals of our physicians with those of the hospital by directly incentivizing adherence to quality parameters, which can help hospitals earn additional Hospital Value-Based Purchasing (HVBP) payments for the quality of service that their patients receive.
To explore how ApolloMD can better serve your hospital’s needs, click here to speak with an expert.